Fight for Private Collections at IRS Just Starting

The effort to keep the private debt collection program alive at the Internal Revenue Service is in its early stages as Congress takes its annual August recess, according to a spokesperson for the organization supporting the program.

“We are nowhere near seeing a resolution at this time,” said Dan Drummond, spokesperson for the Tax Fairness Coalition, an organization of private collection agencies involved in the program. “The demise of the private debt collection program is sorely exaggerated.”

The House Ways and Means Committee last month passed a bill that would cut the funding of the program that gives the IRS the authority to contract with private debt collection agencies. That bill must be heard by the full House, possibly after Congress returns from vacation on September 3.

The Senate version of the proposal is more complex, with funding for the program linked to the funding of a retraining program for IRS workers, says Drummond.

Funding for the program is part of the budget process for the Treasury Department, the parent of the IRS. Congress is supposed to approve agency budgets by October 1, the start of the federal government’s fiscal year, but Congress doesn’t always meet that deadline, notes Drummond.

The Fairness Coalition is talking up a report the IRS released last week that briefly gives the collection program a thumbs up. The 100-page “Reducing the Federal Tax Gap: A Report on Improving Voluntary Compliance” mentions the program along with numerous other efforts by the agency to collect taxes.

The Fairness Coalition notes the IRS says the collection program is “beginning to realize benefits” and that “Ninety-seven percent of the taxpayers who responded to the IRS customer satisfaction survey regarding contact by a [private collection agency] were satisfied with the service received.”

Two agencies currently work with the IRS and plans call for the program to expand to 10 agencies in March 2008.